The Invisible Assumptions

The scenario where we have perfect data lives only in the textbooks of management theory. In the real world we all make assumptions. Usually there is just not enough data and most often, not enough time, money and resources to go get that data. So we rely on a combination of experience and gut instinct to make assumptions both of the external world as well as internally about the business we work in.

This approach has some serious downfalls:

• Much of the knowledge in an organization can be anecdotal or hopelessly outdated.

• We don’t know what we don’t know.

• The retort, “We tried that. It doesn’t work” becomes the by-line for shooting down new ideas.

Worse, we often end up taking some pretty big decisions with serious implications for the business, based on assumptions and relying only on our past knowledge. Not only does this happen with alarming frequency, it happens without even the conscious recognition of the assumptions we are making.

So here’s an idea that you could action right away. The next time you are involved in a strategy or planning decision, initiate a conversation in your team about the assumptions you are making that underlie the strategy/plan. You are likely to find the discussion illuminating. The assumptions could be about:

• What market do we serve?

• Do we understand industry issues from our customer’s perspective?

• Do we understand the implications of our actions on competitors and how they are likely to react?

• Will channel partners continue to support us?

• Do we have the ability to execute our strategies?

We tried it recently in our team. We were in the process of developing our growth playbook for the next three years and went through the usual discussions on growth strategies. When the conversation turned to assumptions, we had the usual, “we think the customers need that” or “we believe there is too much competition in that space”. But then the team kept digging and we realized after a while that we were making some fundamental assumptions about our business model that were not necessarily valid. And if we changed those assumptions, we could get into some highly profitable adjacencies.

We also realized that some assumptions did not require a long and elaborate research project to valid. Half a dozen customer interviews that could be done in a matter of a couple of days was all it took to validate some assumptions and that was a very easy investment to make.

Assumptions are dangerous, especially when they are below the water and made without almost unconsciously. Shine the light on your assumptions and you may find it to be the most illuminating aspect of your decision-making process.